Two years ago, the UK government released its latest industrial strategy white paper. Politicians might deny it, but picking winners is clearly back across a number of industries. With cell and gene therapy, a cutting-edge healthcare sector using living cells and genes to treat or even cure diseases, the UK has selected boldly. In the quality ranking of top global research universities, and in number of Nobel prizes for research, the UK is second only to the US. Yet, it barely makes the top 10 countries in rankings of competitiveness and is a laggard in most measures of productivity. The UK government and its associated quangos clearly have a turn-around job to do, and they might yet succeed in cell and gene therapy.
Building the right ecosystem
There is little evidence that patent filings predict where entrepreneurs will set up companies. Instead it seems that creating the right ecosystem and filling in the gaps is the key to future success. If this is indeed possible, as we have seen in both Boston and the San Francisco Bay Area, success breeds success. In this respect, the right moves are being made in the UK and relatively small but strategic government investments may unlock the more significant long-term venture investments needed.
Academics can now make their own medicines
The development path for more traditional small molecules medicine is long, expensive and, according to all the statistics, it is predicted to fail. It needs deep expertise and deep pockets. To test new leads against a newly identified target, pharma companies can rapidly draw on compound libraries which exceed a million new chemicals and were built up over decades, requiring significant resources and capabilities.
In contrast, cell and gene therapy has no such barriers. The target, if genetic in origin, tends to be well known. With an appropriate toolset, entrepreneurial academic groups can develop these living drugs at least to an early stage. The best teams can then set-up companies themselves or attract industry partners to carry these medicines forward into human trials. The business risks and costs of full development have not gone away, but the barriers to entry are now much lower.
The NHS, integrated and engaged
The UK National Health Service (NHS), with its 1.2 million employees and tens of millions of patients, gives the appearance of a huge bureaucracy. However, it has been rather nimble in aligning to the developing needs of patients who require these advanced treatments. Whereas in the UK there are only a few commercial companies with MHRA-approved small-scale cell and gene therapy manufacturing, there are many more within NHS facilities. In fact, most of the teaching hospitals in London and the larger UK cities have their own licensed manufacturing suites. As an example, the Royal Free Hospital in North London has 4 class D, 1 class C and 5 class B suites and has been involved in the past years in manufacturing for both phase I and phase II clinical studies.
Bridging the gaps
The Cell and Gene Therapy Catapult was set up in 2012 with a five-year grant from the UK and the EU, with the objective of providing technical and logistical support to UK academic groups trying to bring their ideas forward into a medicine. Not all hospitals and pharmacies are licensed and have the training, expertise and physical containment suites to allow dosing of cell and gene therapy products, which are often classified as Genetically Modified Organisms (GMOs). Many patients with serious conditions are therefore required to travel to a centre of excellence, commonly in London, to receive their infusions.
To further democratise and bring these medicines closer to patients, three Advanced Therapy Treatment Centres have now been opened by the Cell and Gene Therapy Catapult and are designed to cover the full geography of the UK mainland.
Perhaps of greater importance, the transition from small studies to larger programs and further, into commercial endeavours, requires a larger highly technical manufacturing infrastructure. With so many new projects advancing into the clinic, there is now a global squeeze on cell and gene therapy manufacturing, and it can close out new entrants.
When I visited the Catapult’s new 6-suite facility at the Stevenage Biohub in the summer this year, the site was already at capacity with Autolus, Cell Medica, Adaptimmune, Freeline and TCR Therapeutics occupying the suites. A second floor was under construction at that time, with a plan to double capacity.
Where is the money coming from?
Encouragingly, UK based biotech raised £2.2 billion in 2018, nearly double the 2017 figure and representing 40% of all European capital raises. Nevertheless, this continues to be dwarfed by the near $17 billion raised in a bumper 2018 by US biotechs.
Importantly, the sources of the UK funding are reasonably diverse, with global investment from US, EU and China in addition to active engagement from global pharma. In 2019, this sector seems perhaps less exposed than others to the negative impact of Brexit on inward investment into the UK. However, while London is a global financial hub, the local AIM market is immature, and the few biotech IPOs in the UK had a clear preference to list directly on NASDAQ.
The government has committed to unlock UK pension funds which manage trillions in investments but generally shy away from investing in higher risk ventures. This is part of the government initiative to review patient capital (long-term capital). It could be significant as it seeks to find ways for capital to break free of the more time-limited VC funding cycles and allow R&D organisations with long maturity requirements to find sources of capital. Under this initiative, the UK Financial Conduct Authority is proposing to set new rules for patient capital investment by year-end.
The impact of Syncona, a UK-listed investment company spun out from the Wellcome Foundation in 2012, will be worth watching. With £1.5 billion available and already eight companies founded, Syncona is entirely focused on developing small UK and EU biotech. They have a focus on long-term capital, eschewing dividends and intend to invest a further £100-200 million in 2019.
Despite this, the available risk capital for entrepreneurs in the UK is said to be still around half of that of the US on a population basis, so there is still more to be done.
The journey continues
While there has no doubt been substantial thought and co-ordinated investment, the UK ecosystem is nevertheless primarily located around the London-Oxford-Cambridge “golden triangle”. To address the uneven creation of opportunity across the UK and tap into broader capabilities, a more northern ecosystem might need to be considered in the future. The work in this area of biotech appears very dynamic, and there is much to encourage us that many of these exciting new companies and medicines may be created here in Europe.
Duncan McKay is senior vice president Europe, Sangamo Therapeutics.